Scrappy Grays Harbor riding surge of auto exports

The Port of Grays Harbor, which once made its fortune shipping mighty Northwest logs to Asia, is enjoying a 21st century export boom with a very different kind of cargo — cars.

The port, 50 miles west of Olympia, expects to send about 70,000 Chrysler vehicles overseas this year — more than triple the 22,000 it shipped in 2010.

“I think we thought 30,000 or 40,000 a year is more where we’d be,” said port Executive Director Gary Nelson. “It’s almost absurd how it’s grown.”

The boom shows how an organization can survive a major disruption in its business model and still carve out new market niches with the right investments and strategy.

It also reflects the rising tide of American-made auto exports — valued at just over $48 billion in 2011, up from about $28 billion in 2009, according to the World Institute for Strategic Economic Research — even if many of those exports bear the nameplates of their foreign factory owners such as Nissan, Mercedes-Benz and Hyundai. Factors driving U.S. auto exports include excess plant capacity, increased productivity, a weaker dollar and desirable vehicle designs.

Grays Harbor is exporting “almost the entire Chrysler product line,” with an emphasis on Jeeps, said Stan Gabara, executive vice president for Pasha Automotive Services, the Corte Madera, Calif.-based company that is handling the exports.

The cars are going to northern Asia, with China the largest market, followed by Japan and South Korea. Gabara expects exports to Korea to rise as the recently approved free trade pact between the U.S. and South Korea takes effect.

The round trip from Grays Harbor to Asian destinations such as China, he said, is 44 hours shorter than sending a ship through Puget Sound to the ports of Seattle or Tacoma.

“The vessel can add four or six round-trip voyages a year without having to steam up to Puget Sound — that’s a big deal,” he said. “Grays Harbor is a very strategic location, in our opinion.”

Some of the factors driving auto exports also have helped boost other non-Boeing Washington exports to a $43 billion in 2011.

“U.S. exports are finally very competitive,” Gabara said. “With a strong currency like the yen, there are additional opportunities for U.S. exports.”

As for Grays Harbor, the attractions for Pasha include ample land for staging cars and an absence of the traffic and rail congestion common along the Interstate 5 corridor.

“It’s a port that doesn’t compete with containers, and that, we feel, is very strategic in the long term,” Gabara said. “Now you can take a full unit train directly onto the dock.”

Back in the mid-to-late ’80s, when export logs were piled high on Grays Harbor’s terminals, the thought of exporting cars would have seemed ludicrous. But then log exports collapsed because of logging and log-export restrictions arising from environmental opposition and the diminishing availability of old growth logs. The port stood virtually empty, and longshore workers were idled.

“There was a time when we had no logs, and the port was hurting... We went through very difficult times,” remembers Leonard Barnes, manager of business and trade development for the Port of Grays Harbor. “We had some long-term visioning plans, strategic sessions, which led us to a cargo mix we thought we could be most competitive in, and sustain long-term growth in.”

The strategy has been paying off. Port revenues climbed steadily through the recession, to $21 million in 2011, from $10 million in 2007, according to port records.

To support the auto export growth, the port recently invested $15 million in adding 37,000 feet of track, a second rail loop, to position trains loaded with motor vehicles.

The connecting Puget Sound and Pacific Railroad also has invested, recently completing a siding near Elma that allows the railroad to increase the frequency of trains on the one-line system.

“The Port of Grays Harbor started with a fresh slate and said, ‘What are we going to do here?’” said Eric Johnson, executive director of the Washington Public Ports Association. “‘We can’t rely on logs... so what can we do to re-think the direction of our seaport?’”

While the port is exporting some logs again, it’s also exporting heavy equipment, bulk agricultural products and bulk liquids including biodiesel, Nelson said. Cars now make up about one third of the vessel calls.

Port executives, Nelson added, are speaking with “two or three” other auto exporters that they hope to add to the port’s exports.

“We are a relatively new player in the game; they want to make sure we can perform,” he said. “We’ll probably be doing some additional paving, creating additional storage space.”